COPF chief slams security sticker scam

The country was losing so much revenue due to the controversial liquor bottle security sticker scam that if tangible measures were taken to stop the fraud, they could fund about eight projects on the scale of the Suwaseriya ambulance service, Chairman of the Committee on Public Finance (COPF) and Colombo District MP Dr. Harsha de Silva said on Saturday. Addressing the media in Colombo, Dr. de Silva described the security sticker, introduced for alcoholic beverages, as a “major scam” and called on the government to act responsibly when the current tender is renewed in 2027. The former State Minister said the security sticker system had originally been introduced with the legitimate objective of improving tax compliance and preventing excise duty evasion in the liquor industry. However, he alleged that the manner in which the programme is currently being implemented was resulting in significant losses to the State. According to Dr. de Silva, the government pays an Indian company US$8 for the digital printing of every 1,000 security stickers, although the actual cost of printing the same quantity is only about 12 US cents. “The money being lost through this scheme is sufficient to finance around eight Suwaseriya-type projects,” he said, highlighting, what he described as, the excessive cost burden borne by the State. Dr. de Silva noted that the high taxes imposed on alcoholic beverages had created incentives for manufacturers, distributors and liquor outlet owners to evade taxes, making a security sticker mechanism a necessary regulatory tool. He said the proposal to introduce security stickers was first put forward during the Yahapalana administration in 2016. The tender process commenced in 2017, was concluded in 2018 and the system was eventually implemented in 2023. The COPF Chairman said his Committee had recently undertaken an extensive review of excise revenue and the operation of the security sticker programme. During the inquiry, it emerged that the Excise Department still lacked a computerised system capable of recording and managing data, related to the stickers, despite their importance to government revenue collection. Dr. de Silva further said that Excise Department officials, who appeared before the Committee on Public Finance, had maintained that no fraud was taking place in relation to the sticker programme. However, he expressed concern over the subsequent seizure of a stock of security stickers, in Malabe, only days after those assurances had been given. He questioned whether stickers recovered during raids were genuine labels, legally obtained from the authorised supplier, or counterfeit versions, printed illegally, arguing that either possibility pointed to serious shortcomings in a system intended to guarantee security and traceability. Dr. de Silva also referred to media reports concerning the company awarded the security sticker tender and allegations of fraudulent activities linked to the firm in several other countries. He urged authorities to ensure greater transparency and accountability in the management of the programme and to carefully scrutinise the tender process when it comes up for renewal next year.